STATE OF MICHIGAN IN THE COURT OF APPEALS. SUSAN R. BANK, COA No.: an individual, Lower Court Plaintiff / Appellant,

Transcription

1 STATE OF MICHIGAN IN THE COURT OF APPEALS SUSAN R. BANK, COA No.: an individual, Lower Court Plaintiff / Appellant, 6 th Judicial Circuit, Oakland County Case No CL -v- Honorable Rae Lee Chabot MICHIGAN EDUCATION ASSOCIATION NEA, and NOVI EDUCATION ASSOCIATION, MEA NEA, incorporated labor unions, Defendants / Appellees. Patrick J. Wright (P54052) Derk A. Wilcox (P66177) MACKINAC CENTER LEGAL FOUNDATION Attorneys for Plaintiff 140 West Main Street Midland, MI (989) Jeffrey S. Donahue (P48588) Catherine E. Tucker (P76437) WHITE, SCHNEIDER, YOUNG & CHIODINI, PC Attorneys for Defendants 2300 Jolly Oak Road Okemos, MI (517) APPELLANTS BRIEF ORAL ARGUMENT REQUESTED

2 TABLE OF CONTENTS TABLE OF CONTENTS... ii INDEX OF AUTHORITIES... iii STATEMENT OF JURISDICTION... vii QUESTIONS PRESENTED... viii INTRODUCTION... 1 STATEMENT OF FACTS AND PROCEEDINGS... 1 ARGUMENT I. The contract claim was properly before the circuit court and the requested relief is based on threatened harm A. Merits of the contract claim B. The Unions threatened Bank with collections. Further, Bank sought discovery on the Unions collections activities, which the trial court prevented II. The duty of fair representation claim was properly before the circuit court and was not within the primary jurisdiction of the MERC A. Merits of the duty of fair representation claim B. The circuit court has jurisdiction over duty of fair representation claims and the doctrine of primary jurisdiction does not apply to such claims III. The right-to-refrain claim allowing Bank to resign at any time was properly before the circuit court A. Merits of the right-to-refrain claim B. Subject matter jurisdiction of right to refrain RELIEF REQUESTED ii

3 INDEX OF AUTHORITIES CASES Abood v Det Bd of Educ, 431 US 209 (1977)... 2 AFSCME v Detroit, 267 Mich App 255 (2005) Amalgamated Association of Street, Electric Railway and Motor Coach Employees of America v Lockridge, 403 US 274 (1971) Bailey v Callaghan, 715 F3d 956 (CA 6, 2013)... 5 Bailey v Callaghan, No 2:12-cv (ED Mich)... 4 Breininger v Sheet Metal Workers Int l Ass n Local Union No 6, 493 US 67 (1989) Butler v Aetna US Healthcare, Inc, 109 FSupp2d 856 (SD Ohio 2000) California Saw and Knife Works, 320 NLRB 224 (1995) Chevron USA Inc v Natural Resources Defense Council, 467 US 837 (1984) City of Grosse Pointe Park v Michigan Municipal Liability and Property Pool, 473 Mich 188 (2005) Clayton v International Union, UAW, 451 US 679 (1981) Cleveland Orchestra Comm n v Cleveland Federation of Musicians, 303 F2d 229 (CA 6, 1962) Coates v Bastian Brothers, Inc, 276 Mich App 498 (2007) Communications Workers v Beck, 487 US 735 (1988) Countrywide Home Loans, Inc v Arbitration Alliance Int l, LLC, 2004 WL (D Utah 2004) Demings v Ecorse, 423 Mich 49 (1985)... 34, 35, 36, 37 Dunn v Detroit Federation of Musicians, 268 Mich 698 (1934) Goolsby v Detroit, 419 Mich 651 (1984) Hunter v Wayne-Westland Community School District, 174 Mich App 330 (1989) Int l Broth of Boilermakers v Local Lodge D-129, 910 F2d 1056 (CA 2, 1990) iii

4 Klapp v United Ins Group Agency, Inc, 468 Mich 459 (2003)... 15, 16 Lambert v Hartman, 517 F3d 433 (CA 6, 2008) Mayo v Great Lakes Greyhounds Lines, 333 Mich 205 (1952) Meagher v Wayne State Univ, 222 Mich App 700 (1997) Michigan Educ Ass n v Dame, unpublished opinion per curiam of the Court of Appeals, decided January 24, Monroe v International Union UAW, 540 FSupp 249 (SD Ohio 1982) Monroe v International Union UAW, 723 F2d 22 (CA 6, 1983) Ottawa County Employees Ass n v Ottawa County General Employees, 130 Mich App 704 (1983) Pattern Makers League of North America v NLRB, 473 US 95 (1985)... 38, 39, 48 Quick v NLRB, 245 F3d 231 (CA 3, 2001) Rinaldo s Const Corp v Michigan Bell Telephone Co, 454 Mich 65 (1997) Rogers v Bd of Educ of Buena Vista Schools, 2 F3d 163 (CA 6, 1993) Saginaw Educ Ass n (Eady Miskiewicz), Case Nos CU13 I-054 to I passim Shay v Aldrich, 487 Mich 648 (2010)... 16, 17 Smigel v Southgate Community School Dist, 388 Mich 531 (1972)... 2 Specht v Netscape, 306 F3d 17 (CA 2, 2002) Stangl v Occidental Life Ins Co of North Carolina, 804 FSupp 2d 1224 (WD Okla 2011) Stark v Kent Products, Inc, 62 Mich App 546 (1975) Teamsters Local 214 (Beutler), Case No CU13 I passim Thomas M Cooley Law School v Doe 1, 300 Mich App 245 (2013)... 7 US Aviex Co v Travelers Ins Co, 125 Mich App 579 (1983) West Branch-Rose City Educ Ass n, 14 MPER (2000)... 2 West Branch-Rose City Educ Ass n, 17 MPER 25 (2004)... 2, 3, 41, 42 STATUTES iv

5 1973 PA PA passim 2012 PA passim 29 USC 185(a) USC USC 158(b)(1)(A) MCL MCL (2)(b)... 3 MCL (a)... 44, 49 MCL (b) MCL , 47 MCL (10)... 46, 47, 49 MCL (2)(a)... 44, 45, 49 MCL (3)... passim MCL (7)(c) MCL , 47, 49 MCL (a) MCL (3) OTHER AUTHORITIES pdf MEA Bylaw II(B)(2)(a) MEA Bylaw IX(A) MEA Bylaw IX(B)(1) MEA Bylaw IX(K) v

6 Offer and Acceptance in Cyberspace, 47 Md BJ 18 (2014) RULES MCR 7.202(6)(a)(i)... vii MCR 7.203(A)(1)... vii MCR 7.204(A)(1)(a)... vii vi

7 STATEMENT OF JURISDICTION In 2013, Plaintiff/Appellant Susan Bank, a Novi public school teacher, attempted to resign from the Defendant/Appellee Michigan Education Association ( MEA ) and the union representing her bargaining unit, Defendant/Appellee Novi Education Association ( Novi EA ) (collectively the Unions ). That attempt was rejected by the Unions because it was not submitted during the month of August. Plaintiff brought suit, and on March 12, 2015, the Sixth Circuit Court for Oakland County dismissed Bank s case. The dismissal of this case was a final appealable order pursuant to MCR 7.202(6)(a)(i), and this appeal was timely pursuant to MCR 7.204(A)(1)(a). Therefore, this court has jurisdiction pursuant to MCR 7.203(A)(1). vii

8 QUESTIONS PRESENTED I. Did the circuit court err in holding that Plaintiff-Appellant s contract claim was hypothetical and moot? Plaintiff/Appellant says Defendants/Appellees say Circuit Court said Yes No No II. Did the circuit court err in holding that Plaintiff-Appellant s duty-of-fairrepresentation claim was within the Michigan Employment Relations Commission s primary jurisdiction? Plaintiff/Appellant says Defendants/Appellees say Circuit Court said Yes No No III. Did the circuit err in holding that it lacked subject matter jurisdiction over Plaintiff-Appellant s right-to-refrain claim? Plaintiff/Appellant says Defendants/Appellees say Circuit Court said Yes No No viii

9 INTRODUCTION The Plaintiff-Appellant, Susan Bank, is a teacher employed by the Novi Community School District. She is included within a bargaining unit represented by the defendant unions, the Michigan Education Association-NEA ( MEA ) and Novi Education Association MEA-NEA ( Novi EA ) (collectively the Unions ). She attempted to resign from the Unions in 2013, but was not permitted to do so because her notice of resignation was not made during August MEA claims that its members can only resign during the month of August this time period is commonly known as the August window. Bank filed a circuit court suit in Oakland County and alleged that the Continuing Membership Application form she signed was not an enforceable contract under which the Unions could demand dues payments, the Unions violated the duty of fair representation by not informing her of the August window, the Unions violated Public Employment Relations Act ( PERA ) by threatening her in an attempt to make her remain a union member and by not allowing her to resign outside of August On March 12, 2015, Oakland Circuit Judge Rae Lee Chabot dismissed the contract claim as hypothetical and moot. 3/12/2015 Order at 2. The duty of fair representation claim was dismissed on primary jurisdiction grounds. The PERA violation related to limiting the right to resign was dismissed on subject matter jurisdiction grounds. 3/12/2015 Order at 2. It is from this Order that Bank seeks relief. STATEMENT OF FACTS AND PROCEEDINGS On August 19, 2002, Bank entered into an agreement with the Unions by signing a form titled Continuing Membership Application (the Application ). A copy of this Application is attached as Exhibit A. At the time she entered into this Application, Michigan law permitted 1

10 union security clauses in collective bargaining agreements. These clauses typically required that those within a bargaining unit, as a condition of employment, either be a member of the union and pay dues, or that nonmembers of the union pay an agency fee that was generally the equivalent of 80%-90% of the full dues amount. This type of agency-fee requirement was outlawed when, in 2012, the Michigan legislature enacted 2012 PA 349, Michigan s right-towork law, which permits public-sector employees to refrain from paying dues and agency fees to their union representatives. MCL (3). Even before 2012 PA 349 became law, covered employees did not have to be members of a union. However, those that chose to resign membership were almost always required to pay an agency fee. See Abood v Det Bd of Educ, 431 US 209 (1977). In Michigan, at least since 1973, PERA had allowed public-sector unions that had been designated as the mandatory collective bargaining agent to include agency fee requirements in collective bargaining agreements. See Smigel v Southgate Community School Dist, 388 Mich 531 (1972) and 1973 PA 25. In 2004, the MERC decided the case of a teacher that sought to become an agency fee payer outside the August window. West Branch-Rose City Educ Ass n, 17 MPER 25 (2004) (West Branch II), and West Branch-Rose City Educ Ass n, 14 MPER (2000) (West Branch I). A copy of West Branch II is attached as Exhibit B, and a copy of West Branch I is attached as Exhibit C. In the West Branch litigation, one of the claims the MEA presented was that the MERC did not have jurisdiction over resignation matters. The MERC rejected this argument: The Union asserts that all members of the Association are voluntary members. [The teacher] entered into a membership agreement with the Association, thereby making himself eligible for the rights and benefits of membership as well as the reciprocal obligations of membership. Respondent contends that under these circumstances, where the Union was simply applying an internal rule, there can be no unfair labor practice. If this were the only issue 2

11 raised in this case there would be no need for further analysis. However, since only nonmembers can request a reduction in their service fee, we must examine whether the Union s restriction on resignation improperly impacts [Communication Workers of America v Beck, 475 US 735 (1988)] rights. Thus, the essential PERA issue raised in this dispute is whether the Union s use of window periods with respect to the resignation of membership and the concomitant assertion of Beck rights violates its duty of fair representation. West Branch II at 3. Having found jurisdiction, the MERC proceeded to the merits and rejected numerous National Labor Relations Act decisions indicating that limitations on an employee s right to resign are improper. In particular, the MERC pointed out that PERA was missing the right-torefrain language found in the NLRA. West Branch II at 5 n. 5. No appeal of West Branch II was filed. In addition to the agency-fee ban previously discussed, 2012 PA 349 also created MCL (2)(b), which indicates that a public-sector employee may, Refrain from... joining a labor organization or bargaining representative or otherwise affiliating with or financially supporting a labor organization or bargaining representative. This is the very language that in West Branch II the MERC noted was in the NLRA and not in PERA that thereby allowed it to reject the federal precedent. Act 349 also added the right to refrain to MCL (3). Act 349 went into effect on March 28, 2013, and, per the statute, applied to collective bargaining agreements that were entered into or renewed after that effective date. The collective bargaining agreement governing Bank s employment expired on June 30, As of that date, Bank could not be required to pay the Unions dues through the union security clause of her collective bargaining agreement. The 2002 Application contains a provision, which Bank agreed to, that allowed for her school employer to deduct and withhold any amounts she owed to the Unions. This authorization states: I authorize my employer to deduct Local, MEA and NEA dues, assessments and 3

12 contributions as may be determined from time to time, unless I revoke this authorization in writing between August 1 and August 31 of any year. Exhibit A, supra. Per this provision, the employer was only permitted to deduct dues and similar fees owed by her to the Unions. In March 2012, the Michigan Legislature made it illegal for a public school district to withhold dues or fees for the union on behalf of the employee by enacting 2012 PA The Unions now have to collect these dues and fees themselves. The passage of 2012 PA 53 led MEA to create an e-dues program, by which it sought bank account and credit card information from its members and other employees covered by its collective bargaining agreements so that it could collect dues and agency fees. In June of 2012, 2012 PA 53 was enjoined by a federal judge. Bailey v Callaghan, No 2:12-cv (ED Mich) PACER Docket entry # 37. This injunction led the MEA to deemphasize the e-dues program. Right to work passed on December 11, PA 349. This was during the e-dues lull. On December 28, 2012, a message from Steve Cook, MEA President, was sent to local presidents, board members and staff. This was a factual finding by the ALJ in her September 2, 2014 Recommendation in the matter of Eady-Miskiewicz, a copy of which is attached as Exhibit D. This message revealed a portion of the MEA s plan to fight right to work: 1 This law, incorporated in MCL (1)(b), states: (1) A public employer or an officer or agent of a public employer shall not do any of the following:... (b) []A public school employer s use of public school resources to assist a labor organization in collecting dues or service fees from wages of public school employees is a prohibited contribution to the administration of a labor organization. However, a public school employer s collection of dues or service fees pursuant to a collective bargaining agreement that is in effect on March 16, 2012 is not prohibited until the agreement expires or is terminated, extended, or renewed. 4

13 The membership application signed by every member indicates that if they wish to resign their membership, they must do so in August and only August. We are sticking to that. Members who indicate they wish to resign membership in March, or whenever, will be told they can only do so in August. We will use any legal means at our disposal to collect dues owed under signed membership forms from any members who withhold dues prior to terminating their membership in August for the following fiscal year. Same goes for any current fee payers who choose not to pay their service fee. Id. Act 349 became effective on March 28, On May 9, 2013, the Sixth Circuit held that the injunction against 2012 PA 53 was improper. Bailey v Callaghan, 715 F3d 956 (CA 6, 2013). At that point, it was clear that the MEA was going to need to reinstitute and reemphasize its e-dues program. Again, the collective bargaining agreement applicable to Bank s unit expired on June 30, 2013, and so, thereafter, the Unions could no longer use the union security provision as a basis for demanding dues. Also, since 2012 PA 53 was now effective, the school district could no longer collect dues or fees for the Unions. The Unions could only rely on the Application as a basis for dues and fees and had to collect those themselves. Thus, at the end of June 2013, these were both significant changes to the status quo. Bank attempted to resign from the Unions in September of 2013, after both Right to Work and 2012 PA 53 were applicable. The Unions refused to honor her resignation. As the Unions stated in their Answer, in response to 17 of the Complaint, [Susan Bank] was informed by her UniServ Director that, among other things, her attempted resignation in September of 2013 was untimely, and that pursuant to her Continuing Membership Application and Defendant MEA s Bylaws, resignations were only accepted in writing during the month of August. The Unions stated that Bank had not appropriately resigned from Defendants and is not relieved of her contractual obligations to Defendants. Answer to 20 of the Complaint. The 5

14 Unions admitted that MEA has publicly stated it may pursue legal collection actions to enforce its contractual rights. Answer to 22 of the Complaint. stated: Exhibit E. On October 21, 2013, Bank received an from a Novi EA official, David Kniaz, that Hi there! I am just ing because MEA sent the officers the list of people not signed up for e-dues yet for this school year, and I notice you were on it. I don t know if this was just an oversight, but I wanted to let you know that they plan to start the legal process soon. If you need the info on how to sign up for e-dues or how to arrange other payment options, let me know and I will get it to you! I just didn t want to see you have to go through the trouble of collections, etc. before I contacted you myself. Thank you! Let me know if you need the info! On November 8, 2013, Bank spoke at a news conference announcing the formation of a new Michigan Senate committee that would examine right-to-work implementation issues. She testified before this committee on November 13, Some actions at the MERC involving MEA will provide some context to the instant matter. The undersigned represents four Saginaw School teachers who claimed that, with the passage of 2012 PA 349, they had the right to resign from the MEA at any time and even if they did not, the MEA had a duty to inform them of the August Window. Saginaw Educ Ass n (Eady Mickiewicz), Case Nos CU13 I-054 to I-060. The National Right to Work Legal Defense Foundation represented other school employees from other districts in similar actions; one of these cases will be discussed below. A hearing in Eady Mickiewicz occurred on February 26, A copy of the transcript of this hearing is attached as Exhibit F. At this hearing, the MEA argued that its existence as a 6

15 union predates PERA, predates MERC, the NLRA, most labor laws; and while the MEA appears frequently in front of [the] MERC, what it does, the benefits it offers, the forums in which it operates are not defined or limited by PERA. 2/26/14 Hearing at 24. It claimed that it had a continuing membership policy since the 1950s, predating the passage of PERA and the August resignation window period... since Id. at 25. MEA claimed that the MERC lacked jurisdiction over whether members could resign at any time since there was no effect on their employment: MERC does not have roving jurisdiction.... Broadly speaking, MERC s jurisdiction is limited to matters affecting employment. Id. Further, at that hearing MEA announced their new Dues Collection Policy through the testimony of executive director Gretchen Dziadosz. Exhibit G. This document indicated that the member s account will go to collections when the accounts are over 90 days in arrears from the billing due date. February 28, 2014 was more than 90 days after the school year had begun. Bank filed her Complaint on February 28, Essentially, the Unions contend that by signing the Application, Bank agreed to perpetually pay the Unions dues until such time as she was no longer employed or that she resigned from the Unions in a given year between August 1 and August 31 the August window. Bank sought a declaration that no such obligation to pay dues exists via the Application (i.e. that there was no enforceable contract both making her a member and requiring her to pay dues) and that the Application does not prevent her from resigning from the unions at any time (i.e. if there was an enforceable contact she had a statutory right to refrain from membership at any time not just August). 2 2 While the term right to refrain was not included in the Complaint, in the claim titled Defendants conduct violates PERA, Bank noted Defendants refusal to allow bargaining unit members to resign during any month other than August is an impermissible attempt to restrain or 7 (Note continued on next page.)

16 Bank sent a resignation letter in August 2014 that the MEA accepted. So, she is no longer a member of the Unions. On September 2, 2014, Administrative Law Judge Julia Stern issued her recommendation in Eady-Miskiewicz. Ex. D, supra. It was noted that there is not mention of the MEA s bylaws or its website on the Application. Eady-Miskiewicz at 4. Judge Stern discussed the internet presence of the MEA bylaws: The MEA bylaws are available on the MEA s website. The MEA s website includes a link to the bylaws, and a Google search for the MEA s bylaws directs one to the website. The website, however, does not include a specific link for resignations or window periods.... The MEA website address appears on almost all MEA publications.... Aside from making the bylaws available through its website and publicizing the website, the MEA does not regularly publish information about the window period of any its publications or send information about the window period to its members. Id. at 3-4. Judge Stern indicated that despite the passage of 2012 PA 53, 2012 PA 349 and the implementation of the e-dues program There is no indication that... the MEA sent any type of notice or reminder of the August window period to members who did not specifically ask about resigning. Eady-Miskiewicz at It was noted that during the hearing on the matter, the MEA s executive director indicated that the MEA had hired debt collectors for the membership year, but had not as, of then, hired collectors for the membership year. Eady-Miskiewicz at 12. Judge Stern rejected the Unions claim that, without an effect on employment, the MERC would lack jurisdiction: coerce a public employee in the exercise of her right to withhold financial support from the union. Id. at 50. Further, in the Relief Requested portion of that document, she sought that this Court issue declaratory relief that she be allowed to resign from the Defendants at any time. Complaint at p 9. Michigan is a notice pleading state. Thomas M Cooley Law School v Doe 1, 300 Mich App 245, 285 (2013). 3 During the school year, there were approximately 112,000 active status (excluding students and retirees) MEA members. Eady-Miskiewicz at 12. 8

17 Prior to PA 349, therefore, under established Commission precedent, [the Unions ] enforcement of its windows period for resignation in this case would not have constituted an unfair labor practice because it did not impact [the Saginaw school teachers] employment. However, PA 349 added to 9 of PERA an explicit right to refrain from the activities described in that section, including joining or assisting a labor organization. Eady-Miskiewicz at 14. On the merits, Judge Stern recommended that MEA members could resign at any time under the statute and that the Application did not constitute a waiver of that right: The addition of the right to refrain language [] in 9(1)(b) of PERA gave employees the right under 9 of PERA to resign their union membership at will and prohibited unions from restricting that right by rule or policy. The [Saginaw school teachers] had a 9 right to resign their union memberships outside of the MEA s August window period. They did not clearly and explicitly waive that right either by joining [the Unions] when [the MEA] had a bylaw that restricted when they could resign or by the Continuing Membership agreements which they signed. Id. at 24. Judge Stern rejected the Saginaw teachers claim that the MEA violated the duty of fair representation by failing to affirmatively notify all of its members about the resignation window. Id. at On September 19, 2014, Bank filed a motion to compel discovery related to her duty-offair-representation claim and some other discovery related to the manner that the MEA had sought collections from various parties it believed owed it money. At the October 1, 2014, hearing on this discovery matter, the circuit court suggested that the parties file cross motions for summary disposition. Bank was to file a summary disposition on the contract claim and if that was not successful then the circuit court would return to the discovery matter In Eady-Miskiewicz, both sides filed exceptions and there is no final decision from the MERC. 5 The motion to compel was denied without prejudice on October 23, Judge Chabot indicated Once the motions for summary disposition have been addressed, Plaintiff may renew the motion if appropriate. 10/23/14 Order at 2. 9

18 On October 3, 2014, Administrative Law Judge David Peltz issued his recommendation in Teamsters Local 214 (Beutler), Case No CU13 I-037, one of the resignation cases brought by the National Right to Work Legal Defense Foundation mentioned earlier. A copy of this Recommendation is attached as Exhibit H. Significantly, Judge Peltz recommended that MERC does not have jurisdiction over right-to-resign claims. He indicated that 2012 PA 349 was far more than the addition of the right to refrain and that this additional statutory verbiage prevented the MERC from having jurisdiction: The flaw in the theory relied upon by Judge Stern is that the analysis focuses almost entirely on the addition of the right to refrain language in Section 9(1)(b) of PERA and essentially ignores the other amendments to Sections 9 and 10 of the Act which were enacted as part of the right-to-work package of legislation.... A thorough examination of the 2012 amendments in their entirety leads to the unavoidable conclusion that the conduct of the sort complained of by Beutler, and by the [Saginaw school teachers] in the cases heard by Judge Stern, while perhaps remediable in another forum with adequate factual support, does not constitute an unfair labor practice over which [the MERC] has jurisdiction. Beutler at Returning to the instant action, the parties brought cross motions for summary disposition which were heard on February 25, Judge Chabot set forth her rationale from the bench: I agree with plaintiff. I think the actions by defendant are ridiculous. However, I don t think I have jurisdiction in this matter. The claim, pursuant to [PERA], is subject to the exclusive jurisdiction of the MERC, and thus, is not properly before this court. The claim regarding the duty of fair representation is also properly before the MERC under the primary jurisdiction doctrine.... Finally, the claim for declaratory relief and injunctive relief is not properly before court as it is based on hypothetical harm.... Since this court lacks jurisdiction... [it] may not address plaintiff s motion for summary disposition. 6 Exceptions to Beutler have been filed and the MERC has not issued a decision yet. 10

19 2/25/15 Hearing at A copy of this hearing transcript is attached as Exhibit I. The Order dismissing the case for lack of jurisdiction was entered on March 12, A timely appeal as of right was taken from this Order on March 30, ARGUMENT To provide context to the circuit court s holding, Bank will first discuss the merits of each separate cause of action, the Unions position regarding the merits on that claim and then Bank will discuss the jurisdiction or other procedural matters related to that claim. This process will be repeated for all three causes of action. I. THE CONTRACT CLAIM WAS PROPERLY BEFORE THE CIRCUIT COURT AND THE REQUESTED RELIEF IS BASED ON THREATENED HARM. A. Merits of the contract claim This claim is there is no enforceable duty created by the Application that requires Bank to pay dues to the Unions. A holding in Bank s favor on this issue would obviate the need to consider either the duty-of-fair-representation claim or the right-to-refrain claim. The Unions cannot successfully rely on the Application as an independent contractual basis that would require Bank to pay dues to the Unions. First, by the express terms of the Application, she did not agree to perpetually pay dues, nor did she agree to remain a member on their terms she only authorized her employer to deduct any dues or fees, if she owed them. Second, assuming the Application is ambiguous, ambiguities are construed against the drafter. Third, even if she had agreed in the Application that she would pay dues and fees and could only resign during one month out of the year, the clause upon which the Unions rely became illegal making the entire Application unenforceable. Fourth, the Unions bylaws cannot be imported into the application. Lastly, neither the federal contract clause nor its state equivalent prevents Bank s requested relief. 11

20 1. Based on the express term within the four corners of the Application, Bank did not agree to pay dues. Michigan s law of interpreting contracts is clear and has been well summarized by this Court: That contracts are enforced according to their terms is a corollary of the parties liberty to contract. Rory v Continental Ins Co, 473 Mich 457, 468 (2005). This Court examines contractual language and gives the words their plain and ordinary meanings. Wilkie v Auto Owners Ins Co, 469 Mich. 41, 47 (2003). [A]n unambiguous contractual provision is reflective of the parties intent as a matter of law, and [i]f the language of the contract is unambiguous, we construe and enforce the contract as written. Quality Products & Concepts Co v Nagel Precision, Inc, 469 Mich 362, 375 (2003). Courts may not impose an ambiguity on clear contract language. Grosse Pointe Park v Michigan Muni Liability & Prop Pool, 473 Mich 188, 198 (2005). Coates v Bastian Brothers, Inc, 276 Mich App 498, 503 (2007). The provisions of the Application are clear. The word dues is used five times in the Application. At no point within the four corners of the Application is there an express agreement whereby Bank promised to perpetually pay the Unions dues independent of those dues required in any governing collective bargaining agreement. The first use of dues merely discusses their tax treatment: Dues payments to the MEA-NEA-Local are not deductible for Federal Income Tax purposes. However, they may be deductible under other provisions of the Internal Revenue Code and/or Michigan Income tax provisions. Exhibit A, supra. These sentences do not create a separate promise to pay dues in the absence of a union security clause in the controlling collective bargaining agreement. The second use of dues occurs in the next paragraph of the Application: As a participant in the Local-MEA-NEA Early Enrollment Membership Program, I am eligible to receive, prior to September 1, 2001, certain benefits normally available only to regular dues paying members of the associations, including coverage under the NEA Educators Employment Liability (EEL) Program. As a condition of eligibility for these benefits, I agree to pay the appropriate unified Active membership dues for the membership 12

21 year in accordance with the regular payment procedures. Should I fail to do so, my eligibility to receive benefits under the NEA EEL Program shall immediately terminate. In addition, I shall be liable for the cost of any benefits that were provided to me under the NEA EEL Program prior to September 1, Id. As a primary matter, that language concerns matters dated 11 months before Bank signed the Application. Generously presuming it was meant to apply to the period between the date of her signature and the start of the school year, that time has long since passed. That paragraph appears to have been created to allow teachers to receive insurance coverage from their signature date to the time they started their teaching duties. The paragraph did not create a separate promise to pay dues in the absence of a union security clause in the controlling collective bargaining agreement. The third use of dues states: PLEASE CHECK ONE (1) BELOW: Cash Payment Membership is continued unless I reverse this authorization in writing between August 1 and August 31 of any year. Payroll Deduction I authorize my employer to deduct Local, MEA and NEA dues, assessments and contributions as may be determined from time to time, unless I revoke this authorization in writing between August 1 and August 31 of any year. Exhibit A, supra. Bank checked the Payroll Deduction option and not the Cash Payment option. The checked option runs only to her employer the school district. It does not mention the Unions as entitled to anything other than to receive dues, assessments and contributions if these have been withheld by the employer. This provision is one sentence with two clauses. Since the first clause is unambiguously an authorization for the employer to deduct dues and fees, the second clause, which contains a method of revoking the authorization, can only apply to that same prior authorization. At the time this Application was made, such an authorized deduction (i.e., a dues or fees requirement in the union security clause of a controlling collective 13

22 bargaining agreement) was legally permissible, and the second clause in the sentence provided a method whereby Bank, or any other teacher, could revoke her previous authorization to have her employer withhold her dues. This revocation of the school district s withholding authority could have only taken place during the month of August. Again, the language is clear and unambiguous and no portion of this provision creates a promise by Bank to pay membership dues independent of the union security clause of a governing collective bargaining agreement, nor does she agree to any restrictions on how or when she may resign her union membership. To be read as the Unions are urging, the provision would have to say something such as I agree to perpetually pay dues, assessments and contributions as may be determined by the MEA and NEA even in the absence of a union security clause requiring such payments, and I further authorize my employer to deduct these dues But the actual language does not include anything similar to this hypothetical wording. 7 The fourth and fifth mentions of dues occur in the section whereby a teacher could sign up for voluntary life membership in the MEA. Bank did not sign up for this. 2. Even if the Application were ambiguous on whether an independent dues obligation was created, with form contracts ambiguities are construed against the drafter. If there is any ambiguity about whether Bank, through the Application, was obligated to pay dues, any such ambiguity would be construed against the drafter the Unions. 7 The Application is a form contract, and another provision of the form does appear to allow a teacher to contractually agree that she will only resign membership from the union during the month of August: membership is continuing unless I reverse this authorization in writing between August 1 and August 31 of any year. See Exhibit A. However, Bank did not check off or otherwise agree to this portion of the form contract. A valid contract requires a meeting of the minds [which] is judged by an objective standard, looking to the express words of the parties and their visible acts. Stark v Kent Products, Inc, 62 Mich App 546, 548 (1975). No objective standard would say that she agreed to a provision where she had the option of checking a box but chose not to, and where the box is visibly not checked, as we have here. 14

23 In interpreting a contract whose language is ambiguous, the jury should also consider that ambiguities are to be construed against the drafter of the contract. 12 This is known as the rule of contra proferentem. 12 This rule is frequently described under the Latin term of contra proferentem, literally, against the offeror, he who puts forth, or proffers or offers the language. Williston, supra, 32:12, pp Klapp v United Ins Group Agency, Inc, 468 Mich 459, 471 (2003). The Application is a form contract and form contracts are the type of contract contra proferentem appears to have been most often applied to. So if there were any ambiguity as to the meaning of the authorization provision, it is resolved against the Unions position as the drafters, and could not require Bank to pay dues. 3. Assuming the Application did create an obligation on Bank to pay dues, it would no longer be enforceable since the dues withdrawal that was made illegal by 2012 PA 53 was central to the agreement between Bank and the Unions; therefore, the agreement cannot be severed. As we have seen, the clause Bank agreed to only authorize her employer (the school district) to withhold dues and fees, it did not promise dues payments to the Unions. But, even if the clause did serve as a requirement that she pay dues to the Unions, this clause is no longer enforceable because it contradicts the plain language of 2012 PA 53, incorporated as MCL (1)(b), which prohibits a public school employer from using public school resources to assist a labor organization in collecting dues or service fees from wages. Under this new statute, the authorization clause, I authorize my employer to deduct Local, MEA and NEA dues, is disallowed. As this authorization provision is now unenforceable, it is stricken from the Application. When a provision of a contract violates a statute, the entire contract is void unless the offending provision is severable: 15

24 Illegal portions of a contractual agreement may be severed. Stokes v Millen Roofing Co, 466 Mich 660, 666(2002). However, in order to sever the illegal portion, the illegal provision must not be central to the parties agreement. Id. If the agreements are interdependent and the parties would not have entered into one in the absence of the other, the contract will be regarded... as entire and not divisible. Id., quoting 3 Williston, Contracts (3d ed), 532, p 765. AFSCME v Detroit, 267 Mich App 255, 262 (2005). This voids the Application as Bank filled it out and agreed to it. Here, even a cursory examination of the Application shows that the dues authorization provision is central to the agreement. The Application covers little except for the manner of dues collection. Further, the Application has no severance provision which might save the rest of the agreement by narrowly removing the objectionable clause. Thus, even if the Application were construed to require Bank to pay dues, the passage of 2012 PA 53 stuck a central portion of the agreement, making the remainder void. 4. The bylaws cannot be imported into the four corners of the Application to create either an obligation requiring Bank to pay dues or for her to only resign her membership in August of any given year. The Unions contend that the MEA s bylaws should be imported into the Application. But the Unions do not mention the bylaws in their Application. Further, they admit that they have no policy or procedure for informing members of the bylaws, and in the instant matter Bank has sworn that she never received a copy of any bylaws. As a matter of contract law, the bylaws cannot be used as extrinsic evidence. Extrinsic evidence to aid in understanding an agreement can only be introduced when there is an ambiguity in the agreement. Ambiguity in a contract has been defined as, when its provisions are capable of conflicting interpretations. Klapp, 468 Mich at 467. But, as here, [i]f the contract, although inartfully worded or clumsily arranged, fairly admits of but one interpretation, it is not ambiguous. Meagher v Wayne State Univ, 222 Mich App 700, 722 (1997). Where there 16

25 is no facial or patent ambiguity in an agreement, the court will not look to extrinsic or parol evidence due to the parol evidence rule, which prohibits the use of extrinsic evidence to interpret unambiguous language within a document. Shay v Aldrich, 487 Mich 648, 667 (2010). And courts are not permitted to create ambiguity where the terms of the contract are clear. City of Grosse Pointe Park v Michigan Municipal Liability and Property Pool, 473 Mich 188, 200 (2005). Where, however, there is latent ambiguity, the courts will sometimes look to extrinsic or parol evidence: An ambiguity may either be patent or latent. This Court has held that extrinsic evidence may not be used to identify a patent ambiguity because a patent ambiguity appears from the face of the document. However, extrinsic evidence may be used to show that a latent ambiguity exists. With respect to a latent ambiguity, we have explained as follows: A latent ambiguity, however, is one that does not readily appear in the language of a document, but instead arises from a collateral matter when the document s terms are applied or executed. Because the detection of a latent ambiguity requires a consideration of factors outside the instrument itself, extrinsic evidence is obviously admissible to prove the existence of the ambiguity, as well as to resolve any ambiguity proven to exist. A latent ambiguity exists when the language in a contract appears to be clear and intelligible and suggests a single meaning, but other facts create the necessity for interpretation or a choice among two or more possible meanings. To verify the existence of a latent ambiguity, a court must examine the extrinsic evidence presented and determine if in fact that evidence supports an argument that the contract language at issue, under the circumstances of its formation, is susceptible to more than one interpretation. Then, if a latent ambiguity is found to exist, a court must examine the extrinsic evidence again to ascertain the meaning of the contract language at issue. Shay, 487 Mich at (internal citations omitted). Note that even with latent ambiguity, there must be other facts that create the necessity for interpretation or a choice among two or more possible meanings. Id. There are no such facts present here. Bank agreed in her Application to 17

26 authorize her employer to deduct any dues she owed from her paycheck nothing more. The Application, which is the only agreement she entered into with the Unions, placed no restrictions on her ability to resign from the Unions. Consequently, there is no reason to consider the bylaws as extrinsic or parol evidence in interpreting the Application. This is even more so since there is no mention of the bylaws in the Application, the MEA has no policy or practice of informing members of the bylaws when they join, and since Bank did not receive a copy of the bylaws. In West Branch I, a teacher sought to resign from the MEA outside the August window so as to immediately become an agency fee payer. An administrative law judge ruled in favor of the unions and the teacher filed exceptions with the MERC. In its factual predicate, the MERC noted that there was a union security clause, that the union s bylaws attempted to limit resignations to August, and that the teacher had filled out the Continuing Membership Application form and checked the payroll deduction option. In examining the teacher s claim, the MERC focused on two issues: (1) whether the teacher had received notice of his right to be an agency-fee objector; and (2) whether the teacher had received notice of the August window. Only the second issue is relevant here. Regarding the August window, the teacher indicated that he was unaware of it before he sought to resign. Id. The MERC noted that the union bylaws submitted into evidence were dated nine years after Charging Party first became a member of the Union, and there was nothing in the record establishing that language pertaining to the window period was included within any prior version of the bylaws. Id. at 4. 8 The MERC also noted there was no evidence that the 8 In Eady-Miskiewicz et al the Unions showed that the bylaws had long included the window period. Bank is not claiming that the bylaws were not in existence when she signed the Application. 18

27 teacher was ever provided with, or even given access to, a copy of the by-laws prior to his resignation. Id. Application : The MERC began its analysis by discussing the impact of the Continuing Membership In recommending dismissal of the charges, the ALJ relied upon the Continuing Membership Application which [the teacher] signed upon his hiring.... However, that document does not in any way indicate that the district s employees have the option to decline membership in the Union and become an agency fee payer. It is true that the Continuing Membership Application makes reference to a one-month window period in August of each year. However, that language only restricts [the teacher] s ability to revoke his or her dues checkoff authorization. There is nothing in the document limiting [the teacher] s ability to resign from the Union. The National Labor Relations Board... has found that a dues check-off authorization constitutes an agreement between the employee and the employer as to the precise method by which union dues are to be paid, and that such an agreement does not itself obligate an employee to remain a full union member. Id. The MERC held that the union failed to provide the teacher with notice of his right to refrain from joining the union and also failed to provide him with information concerning its own internal rules regarding continuing membership obligations. Id. Premising its finding on the fact that the [union] failed to provide [the teacher] with notice of his rights and obligations under both PERA and the MEA constitution and bylaws, the MERC held in favor of the teacher and noted that it therefore need not address the broader issue concerning the legitimacy of the Union s policy restricting the ability of its members to resign. Id. Aside from ordering the union to pay interest on a minor award of dues, the MERC ordered the union to ensure that the MEA bylaws are easily accessible to all Union members, and/or explicitly notify each member of the existence of the one-month period on resignations. Id. (emphasis added). On appeal, this Court vacated the MERC s ruling since the issue of notice was not raised in [the teacher] s exceptions to the ALJ s recommendation. Michigan Educ Ass n v Dame, 19

28 unpublished opinion per curiam of the Court of Appeals, decided Jan. 24, 2003 (Docket No ). 9 A copy of this opinion is attached as Exhibit J. Thus precluded from considering whether the teacher had been provided notice of the August Window, in West Branch II, the MERC then held there was no right to resign largely based on the absence of explicit right-torefrain language. But, the MERC did not repudiate its prior analysis of the Application. The Unions have therefore been on notice since at least 2000 that the Application only governs dues deductions, does not control membership, and that it does not itself obligate an employee to remain a full union member. West Branch I. Nor was there any indication in West Branch II that the Application constituted a separate dues requirement that would exist with or without a valid union security clause requiring dues or fees in a governing collective bargaining agreement. In their opposition to Plaintiff s Motion for Summary Disposition on Contract Claims, the Unions essentially admit that if the Application is read in isolation there is no requirement on Bank to pay dues: [Bank] is incorrect that [the Unions] are solely relying upon the language in the Continuing Membership Application to assert that [Bank] is bound to be able to resign her membership with Defendants in any given year. [The Unions] have always stated that the Continuing Membership Application and [the Unions] Bylaws form the contractual relationship. Defendants Response in Opposition to Plaintiff s Motion for Summary Disposition on Contract Claims at 2 (emphasis in original). The Unions contend that Bank must inform herself about the MEA bylaw containing its August resignation window. Id. at 3. Implicitly, this duty applies to the approximately 112,000 other MEA members as well. The Unions contend that when the Application and bylaws are read in conjunction PA 53 has no impact upon the contractual relationship between [Bank] and [the Unions] with regard to these issues. Id. at n In that case, the teacher failed to file a brief with this Court. Michigan Educ Association 20

29 Finally, the Unions spend a good portion of their brief on the irrelevant question of whether Bank had subjective knowledge of the bylaws. The Unions cite Cleveland Orchestra Comm n v Cleveland Federation of Musicians, 303 F2d 229 (CA 6, 1962), Dunn v Detroit Federation of Musicians, 268 Mich 698 (1934), Mayo v Great Lakes Greyhounds Lines, 333 Mich 205 (1952), and Ottawa County Employees Ass n v Ottawa County General Employees, 130 Mich App 704 (1983) for the proposition that where an individual joins a union he is governed by its bylaws and constitution. This is true as far as it goes, none of the cases covers the factual situation here that the union wants dues independent of any collective bargaining agreement and that it wants to incorporate the MEA bylaws into an initial membership agreement without making any mention of the bylaws in the agreement that the individual signed. The only case that has ever dealt with this factual situation was West Branch I, where such an attempt was held to be improper. The Unions try and blunt the impact of 2012 PA 53 by focusing on the bylaws instead of the application: [I]t is of no import that PA 53 prohibited an employer from making deductions from [Bank] s paycheck. Without conceding that [Bank] is correct in any way in how she tries to limit the language of the Application or if it is impacted by PA 53, [Bank] still had an obligation to pay the union pursuant to the union s governing documents if she did not resign during August. The MEA s Bylaw I clearly has no relation to an employer s dues and is unaffected by the passage of PA 53. Defendants Response in Opposition to Plaintiff s Motion for Summary Disposition on Contract Claims at 12. In essence, the Unions contend that the Application is merely a vehicle to membership and that once an individual reaches that status, the Application is of little import only the bylaws matter. Thus, they focus on Act 53 s impact on the bylaws as opposed to the Application despite the fact that the only document signed was the Application and there is nothing in that document indicating a signee will be bound by the bylaws. Apparently, all public 21